As global inflationary pressures continue to cool and more markets across the Latin American and Caribbean (LAC) region enjoy fiscal stability, the Mastercard Economics Institute (MEI) in its 2025 Economic Outlook report has indicated that there is great expectation for spending on ‘big moments’ to remain a top priority among customers this year.

The entity in the recently published report, titled ‘Steering through change’, said that with the global economy having admirably navigated a series of shocks in the last few years and with inflation nearly back on track in most countries, customers are expected to become more empowered as innovation and digitalisation in the retail sector provide them with more choice, and businesses with greater operational efficiency.

To this end, consumers in taking advantage of lower prices and declining interest rates, the institute believes will also be spending on more durable goods such as electronics, furniture and appliances.

“While pent-up demand for experiences has diminished, MEI still observes a strong desire for consumers to prioritise spending on “big moments”, the report noted.

Unlike services inflation which has proven to be a little stickier in some countries, goods inflation for most countries, the report said has now decelerated.

“While inflation has been decelerating in most LAC countries, the final mile to reach the inflation target will likely challenge countries in 2025,” it added.

Mastercard which prides its business on providing cardholders access to unforgettable experiences and everyday value through its delivery of priceless moments, also wants consumers to be able to spend on other tangible items needed.

As customer spending patterns in particularly Latin America, continues to reflect a balance between value and luxury, the report said that this duality comes as a representation of the region’s economic dynamics, where it has been inflationary pressures that have been leading “most consumers to prioritise affordability, while targeted segments drive selective growth in premium categories.”

Projecting modest economic expansion for the LAC region this year, largely driven by monetary and fiscal recalibrations, the MEI has however indicated that it remains cognisant of nuanced development taking place in each country.

The entity said that with fiscal policy remaining a key focus, and inflation serving as the primary thermometer of policy success this year, its expectation is that LAC countries despite their differences, will continue to face the consequences of local and global policies in 2025.

Forecasting inflation at 35 per cent in in 2025, down from 120 per cent in 2024, with risks skewed toward even lower inflation, its pace of convergence, the institute said, is what it expects to guide the next steps in fiscal and monetary policy across countries.

Highlighting top global trends to watch in the LAC region in 2025, the MEI cited pricing priorities, migration and remittances, an evolution of the SHEeconomy and trade tensions among those expected to be most significant.

Acknowledging possible risks in its outlook, the MEI however said that geopolitical turmoil in Europe, Asia and the Middle East continues to remain significant issues which could scale back activity or taper growth in some territories.

“Additionally, there is uncertainty surrounding the costs and gains of the incoming US administration’s economic agenda,” the report noted.

“Policy changes in the US could affect Mexico and Central American countries through trade and remittances. In Mexico, changes to the judicial system may also negatively impact business confidence,” it further outlined.